Which Parent Can Claim Child-Related Tax Breaks After Divorce or Separation?

Divorce or legal separation creates many questions. Among the most important financial considerations for couples with children is who'll be eligible for potentially valuable child-related federal income tax breaks.

Claiming the Child

The Internal Revenue Code includes rules for determining when a divorced or legally separated parent is the "custodial" parent and can treat a child as his or her qualifying child for federal tax purposes, potentially making that parent eligible for various tax benefits. Usually, the parent with whom the child spends the most nights during the year wins out.

However, under the "noncustodial parent rule," a custodial parent may voluntarily release to the noncustodial parent the right to claim the child for certain federal tax breaks. For this to occur, the couple must pass five tests for the tax year in question:

1. ‍The support test. More than half of the child's support needs to come from one or both parents.‍
2. The divorced or separated test. The parents must be divorced or legally separated, have lived apart for the last six months of the year, or be separated under a private written separation agreement.‍
3. The custody test. The child needs to have lived with one or both parents for more than half of the year. For federal tax purposes, custody is determined by the child's actual residence — based on overnight stays — rather than by legal custody rights under state law. Temporary absences, such as for school or vacations, are generally treated as time the child lived with the parent who'd otherwise have custody.‍
4. The written declaration test. The custodial parent must sign a written declaration releasing to the noncustodial parent the right to claim the child as a qualifying child for the year. The required written declaration is typically made by having the custodial parent sign IRS Form 8332, "Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent," to release the claim for one or more years.‍
5. The return attachment test. The noncustodial parent must attach the signed Form 8332 to his or her Form 1040, "U.S. Individual Income Tax Return." For e-filed returns, Form 8332 is retained but not physically attached.

Yes and No

When the five tests are passed, the noncustodial parent qualifies for the following federal tax breaks with respect to the qualifying child (assuming all other rules are met):

The Child Tax Credit. For 2025, the One Big Beautiful Bill Act increased this credit to $2,200 per eligible child under age 17, subject to an income-based phaseout. The IRS will annually adjust that dollar amount for inflation. An eligible noncustodial parent can claim a smaller credit of $500 for a dependent child who's ineligible for the regular child credit (usually one who's age 17 or older). This smaller credit is subject to the same income-based phaseout but isn't adjusted for inflation annually.

Higher education credits. An eligible noncustodial parent can claim the American Opportunity Tax Credit (worth up to $2,500 per student) or the Lifetime Learning Credit (worth up to $2,000 per tax return) for a child's qualified education expenses. Both credits are subject to an income-based phaseout.

The student loan interest deduction. An eligible noncustodial parent can claim a deduction of up to $2,500 (per tax return) for qualified education loan interest expense incurred for a child's education, also subject to an income-based phaseout.

However, the noncustodial parent rule has its limits. According to the IRS, a noncustodial parent can't claim the following four tax breaks based on a qualifying child:

1. Head of household filing status,
2. The child and dependent care credit,
3. The Earned Income Tax Credit, and
4. Tax-free benefits under an employer-sponsored dependent care assistance program.

These tax breaks always belong to the custodial parent.

Mutually Claimable Breaks

Whether or not the noncustodial parent rule applies to a qualifying child, both parents can generally take advantage of certain other federal tax breaks. These include itemized deductions for the child's medical expenses and tax-free:

• Distributions from a Health Savings Account for the child's qualifying medical expenses,
• Employer reimbursements for the child's medical expenses, and
• Treatment of employee discounts and no-additional-cost services provided to the child.

This "both parents rule" applies as long as: 1) the parents provide more than half of the child's support for the year, 2) the child is in the custody of one or both parents for more than half the year, and 3) the child meets the definition of a qualifying child of one of the parents. If these conditions aren't satisfied, and the noncustodial parent rule doesn't apply, the aforementioned mutually claimable tax breaks are off limits to the noncustodial parent.

Revoking the Release

Under IRS regulations, a custodial parent may unilaterally revoke his or her release of the right to claim a qualifying child, effectively taking back the applicable federal tax breaks. To do so, the custodial parent must provide the noncustodial parent with written notice of the revocation or make reasonable efforts to provide such notice.

The revocation can't take effect any earlier than the year after the year in which the custodial parent provides notice or makes reasonable efforts to do so. The custodial parent should keep a copy of the revocation and evidence of delivery (or attempts thereof) of the required notice to the noncustodial parent.

Work With Your Advisors

Child-related tax breaks can be overlooked or undervalued during divorce or legal separation proceedings. Both custodial and noncustodial parents should work closely with their attorneys and tax advisors to address this matter during negotiations. Your tax advisor can explain the rules further and answer any questions you may have.